Crypto Markets Stumble as Bitcoin Retreats from Yearly Gains

The cryptocurrency market is facing a significant cooling period as Bitcoin currently trades around $87,800, effectively wiping out a large portion of its gains for the year. Over the last 24 hours, the premier digital asset saw a 1.5% dip, while Ethereum followed suit, hovering near the $2,930 mark.

This latest slide is part of a broader downward trend that began in mid-January. The market saw a particularly sharp correction on January 21, when a drop to $89,000 triggered over $1 billion in liquidations. The pain for leveraged traders has continued into this week; CoinGlass data indicates that another $224 million in long positions were liquidated in the past day alone, including $68 million in Bitcoin futures and $45 million in Ether futures. Bitcoin is now trading roughly 30% below its all-time high of $126,210, which it hit back in October 2025.

Political Friction in D.C. Rattles Investors

Much of the current market anxiety stems from the looming threat of another U.S. government shutdown. Federal funding is set to expire on January 30, and without a bipartisan agreement in Congress, the country could face its fourth partial shutdown in just two years. The memory of the record-breaking 43-day shutdown, which only concluded this past November, remains fresh for investors.

While the House of Representatives recently passed a massive 1,059-page spending package—causing the odds of a shutdown on Polymarket to plummet from 77% to under 10%—the situation in the Senate remains precarious. Democratic senators are threatening to block funding for the Department of Homeland Security following a controversial shooting involving an ICE officer in Minneapolis. To complicate matters, a winter storm could prevent several senators from returning to Washington in time for Monday’s crucial vote.

For the crypto sector, this political dysfunction is a double-edged sword. While some die-hard proponents view Bitcoin as a hedge against fiscal instability, the recent price action suggests a “risk-off” sentiment, with investors favoring traditional safe havens over digital assets.

Gold Hits Historic Milestone While Bitcoin Lags

The divergence between Bitcoin and gold has reached a fever pitch. On Monday, gold prices shattered records by breaking the $5,000 per ounce barrier for the first time in history. This surge from $4,600 at the start of the month reflects a global flight to safety amid geopolitical tensions and growing concerns over the Federal Reserve’s independence.

Bitcoin has failed to capture that same “digital gold” narrative lately. On-chain data reveals that long-term holders are using rallies to exit their positions, while newer investors are sitting on unrealized losses. This significant supply overhang has made the psychological $100,000 level feel increasingly out of reach. Currently, Polymarket bettors give gold a 45% chance of outperforming both Bitcoin and the S&P 500 in 2026, while Bitcoin’s odds sit at 36%.

A Hawkish Shift at the Federal Reserve

Adding to the market’s headwinds is the upcoming Federal Reserve meeting on January 28-29. After three consecutive rate cuts in late 2025, the federal funds rate currently sits between 3.5% and 3.75%. However, the CME FedWatch Tool suggests only a 16% chance of a cut this month, with the vast majority of analysts expecting Chair Jerome Powell to hold steady.

The internal dynamics of the Federal Open Market Committee (FOMC) have also shifted toward a more hawkish stance with the new year. Cleveland Fed President Beth Hammack, a former Goldman Sachs executive, has joined the voting members and signaled a firm “no” on rate cuts until at least the spring of 2026. Hammack argues that current policy is barely restrictive and expects inflation to linger around 3% through the end of the year. She is joined in this cautious outlook by fellow new voters Lorie Logan of the Dallas Fed and Neel Kashkari of the Minneapolis Fed, signaling a tough road ahead for those hoping for more liquidity in the markets.

DMG Blockchain Solutions: Corporate Snapshot

In the midst of this turbulent macro environment, specialized firms like DMG Blockchain Solutions Inc. (DMGI) continue to navigate the evolving ecosystem. Based in Delta, Canada, and founded in 2011, DMG focuses on end-to-end digital solutions designed to monetize blockchain technology.

Despite the broader market slump, DMG managed a slight uptick in its latest trading session, though it remains well within the lower half of its 52-week range as the industry awaits a clearer signal from both Washington and the Fed.